The article discusses the absence of explicit prohibitions on round-tripping under FEMA while highlighting regulatory controls through other fiscal measures.
Round-Tripping in Indian Foreign Exchange Law
This article explores the regulatory framework surrounding round-tripping transactions in India. While the Foreign Exchange Management Act (FEMA) does not explicitly prohibit round-tripping, regulators manage it through the oversight of overseas investment and Foreign Direct Investment (FDI) regulations.
The absence of specific statutory prohibition has led to increased scrutiny and regulatory challenges for such transactions. The article emphasizes the necessity of demonstrating commercial substance in these deals to comply with existing laws.
Legal practitioners should advise clients on the implications of engaging in round-tripping, ensuring compliance with FEMA guidelines to avoid potential regulatory action.
Citations
- FEMA (2026)
